Greece’s economy is projected to grow by 3.8% in 2021 and 5.0% in 2022. The easing of travel restrictions is expected to support services activity and exports. The importance of tourism makes Greece’s outlook especially reliant on successful vaccination campaigns globally. Rising disbursements of Greece’s substantial EU-funded Recovery and Resilience Plan will support investment in 2021 and 2022, if recent reforms succeed in encouraging swifter and higher-quality public capital spending and if businesses productively make use of the Plan’s financing facilities.
As containment measures are lifted and activity gradually recovers, income support can be refocused to encourage receivers to enrol in quality vocational and reskilling programmes. Support policies have encouraged banks to restart lending to businesses, but bankruptcies and non-performing loans are likely to rise as support is withdrawn, underscoring the urgency to raise banks’ asset quality. Raising the public administration’s effectiveness would help improve the investment climate and the implementation of recent reforms.